No rest from distraction for Apple, says analyst, just because activist investor puts eBay in crosshairs

Investment agitator Carl Icahn has now put his sights on auctioneer eBay, but that doesn't mean he will end his pursuit of a massive stock buyback by Apple, an analyst said today.

"Icahn is more than capable of targeting more than one company at the same time," said Patrick Moorhead, principal analyst of Moor Insights & Strategy, in an email.

Moorhead was responding to questions after eBay acknowledged that Icahn, known for his hounding of corporate leaders and boards he believes are not doing their jobs, had acquired a less-than-1% stake in the online auction giant, had nominated two of his employees to the board, and had submitted a non-binding proposal that asked eBay to spin off its PayPal unit.

PayPal, which was acquired by eBay in 2002 for $1.5 billion, accounted for approximately 41% of eBay's total net revenue in 2013, up slightly from 40% the year before. In 2013, PayPal's net revenue climbed 19% to $6.6 billion.

Icahn's actions were detailed by eBay in a filing Wednesday with the U.S. Securities and Exchange Commission.

"We believe strongly that PayPal and eBay are far more valuable together than apart," wrote eBay's president and CEO John Donahoe on Wednesday in a letter to employees. "The synergies are clear. PayPal has succeeded because it is a part of eBay, not in spite of it."

Also in the letter, Donahoe urged eBay employees to stay focused. "We must not let Mr. Icahn's proposals become a distraction for us, (emphasis in original)," the CEO wrote.

Good luck with that, Moorhead has said about Icahn's eye on Apple. "This is absolute trouble," Moorhead said in an interview last year when Icahn first disclosed his Apple intentions. "This makes [CEO] Tim Cook's job a lot harder. Not only does he have to bring Apple back to the expectations level [of years past] but now he has to deal with Icahn. And that's a full-time job."

And Icahn's newest move won't let Apple off the hook.

"I have no reason to believe it will get any easier for Apple," said Moorhead, who has followed Icahn's moves, particularly the investor's unsuccessful attempt to quash Michael Dell's plan to take the computer maker he founded private last year.

In fact, on the same day that eBay said Icahn was pushing for a breakup, the 77-year-old billionaire tweeted more about Apple.

"We feel [Apple's] board is doing great disservice to shareholders by not having markedly increased its buyback," Icahn said on Twitter Wednesday. He also promised to soon publish a more detailed explanation of his new plans or demands.

Earlier in the day, Icahn used Twitter to say he had bought $500 million worth of Apple shares in the last two weeks, and that his holdings now topped $3 billion, or about 0.6% of Apple.

Icahn currently has a non-binding proposal before Apple shareholders that promotes a $50 billion buyback over the next eight months to drive up the share price. Apple has urged its stockholders to vote down the proposal, pointing out that it is in the midst of a multi-year $60 billion repurchasing plan and arguing that it needs its massive war chest to fend off competitors and invest in new products.

Icahn had scaled back his demands from an original $150 billion buyback scheme after getting nowhere in meetings with Cook last year. Icahn has argued that Apple's huge cash reserves -- $147 billion as of the end of the third quarter, most of it sequestered overseas -- should be used to return value to shareholders, even if that meant Apple had to borrow to fund his proposal.

Apple should expect to remain a top priority for Icahn, even if he puts his spotlight on any number of other companies, Moorhead said. "Apple is the kind of company that Icahn loves to target, as in many ways Apple will make decisions that are good for end users or for long-term versus short-term gains," said Moorhead.

Apple will hold its annual shareholders meeting Feb. 28, when stockholders will vote on Icahn's proposal.